S&P rates Dole BB, facilities BB+

S&P said it preliminarily rated Dole plc, which is planning an IPO of $500 million to $700 million in common shares, BB+ and preliminarily gave BB+ issue and 2 recovery ratings to its planned senior secured facilities.

Dole, to be formed from Total Produce plc, Dole Food Co. Inc., and affiliates of Castle & Cooke Inc., plans to use the proceeds and a $600 million revolver due 2026, a $300 million term loan A due 2026 and a $540 million term loan B due 2028, to pay certain costs related to the merger, refinance Total Produce's capital structure, repay a significant portion of Dole's debt and other corporate purposes.

All the ratings are preliminary until Dole finishes the IPO. The merger also depends on the successful completion of the IPO.

“Following the IPO, we forecast the company's leverage will be moderate and expect it to maintain a prudent financial policy. We view the merger of TP and Dole Food as transformative because it will create the No. 1 player in the fresh produce market,” S&P said in a press release.

The outlook is stable, mirroring an expectation for limited integration risk and that the company's operating performance will remain steady due to its better product and geographic diversity. “We also expect Dole to maintain leverage of just below 3x while steadily improving its free operating cash flow (FOCF) over the next two years,” the agency said.

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